Before You Move: The Essential Timeline
Planning your pension arrangements for retirement abroad should start at least 12 months before your intended move date. Many of the steps below have lead times, and rushing decisions about pension transfers or tax arrangements can be costly. Here is a practical timeline to follow.
12 Months Before
- Request your State Pension forecast — check your National Insurance record online at gov.uk to see your projected State Pension and whether you have any gaps worth filling
- Contact all private pension providers — inform them of your plans to move abroad and ask about their procedures for paying overseas residents
- Research your destination country’s tax treatment of UK pensions — some countries tax pension income more heavily than the UK, while others are more favourable
- Check whether a double taxation agreement exists — this determines whether you pay tax in the UK, your new country, or both. See our double taxation agreements guide
6 Months Before
- Decide whether to transfer pensions overseas — consider whether a QROPS transfer makes sense, or whether keeping your pension in the UK is simpler and cheaper
- Arrange healthcare — apply for an S1 form if moving to an EEA country, or arrange private health insurance for non-EEA destinations
- Open a local bank account — many pension providers can pay into overseas accounts, but you may need a local account established first
- Set up a currency transfer service — specialist providers offer better exchange rates than high street banks for regular pension transfers
3 Months Before
- Notify HMRC of your departure — complete form P85 to inform HMRC you are leaving the UK
- Apply for a non-resident tax code — submit form DT-Individual to HMRC to get a NT (No Tax) code so your pension is paid gross
- Update your pension provider with new address details — some providers need to update their records well in advance
- Consider filling any remaining NI gaps — once abroad, you can still pay voluntary NI, but it is easier to sort out while still in the UK
Step 1: Understand Your State Pension Abroad
Your UK State Pension does not stop when you leave the country. You can claim it from anywhere in the world, and it can be paid into a UK or overseas bank account. However, the critical question is whether your pension will continue to increase each year.
The triple lock guarantee (which increases the State Pension by the highest of inflation, average earnings growth, or 2.5%) only applies if you live in the UK, the European Economic Area (EEA), Switzerland, or a country with a relevant social security agreement that covers uprating. Popular retirement destinations like Australia, Canada, New Zealand, and South Africa are frozen countries — your State Pension stays at the rate when you first claimed or left the UK.
Step 2: Review Your Private and Workplace Pensions
Contact every pension provider to understand your options. Key questions to ask:
- Can you continue to manage your pension online from overseas?
- Will they pay into an overseas bank account, and in which currencies?
- Are there any additional charges for overseas residents?
- Do they offer flexible drawdown for overseas residents, or only full encashment?
- What identification and address verification do they need for overseas residents?
Some providers restrict services for non-UK residents. If your current provider will not offer full services overseas, you may want to transfer to one that does before you move.
Defined Benefit Pensions
If you have a defined benefit (DB) pension, it will continue to pay your guaranteed income wherever you live. Most DB schemes can pay into overseas bank accounts. Transferring a DB pension to a QROPS is possible but requires careful consideration — you would be giving up a guaranteed income for life in exchange for flexibility and potential currency benefits.
Defined Contribution Pensions
DC pensions in drawdown can usually continue as normal when you move abroad. Your provider should be able to make regular or ad-hoc payments to your overseas bank account. If you have not yet accessed your pension, you can start drawdown from abroad, though some providers may require you to begin this process while still UK-resident.
Step 3: Sort Out Your Tax Position
Tax is often the most complex part of retiring abroad. The key steps are:
- Determine your tax residency — the UK’s Statutory Residence Test determines whether you are UK tax resident. Most people who move abroad permanently will become non-UK resident after a full tax year abroad
- Apply for a non-resident tax code — once non-resident, apply to HMRC for an NT code so your pension provider stops deducting UK tax at source
- Understand local tax obligations — register with the local tax authority in your new country and declare your UK pension income as required
- Claim DTA relief — if a double taxation agreement exists, ensure the correct country is taxing your pension income to avoid double taxation
| Pension Type | Typical DTA Treatment | Notes |
|---|---|---|
| State Pension | Taxed only in country of residence | Most DTAs assign taxing rights to where you live |
| Private pension (drawdown) | Taxed only in country of residence | Under most DTAs; some exceptions exist |
| Pension lump sum (PCLS) | Usually tax-free in the UK | May be taxable in your new country of residence |
| Government pension (civil service) | Taxed only in the UK | Most DTAs reserve taxing rights for the paying government |
Step 4: Healthcare and the S1 Form
If you retire to an EEA country, you may be entitled to an S1 certificate. This registers you with the local healthcare system at the UK’s expense, giving you the same access to state healthcare as local residents. To get an S1:
- You must be receiving a UK State Pension or certain other qualifying benefits
- Apply to the Overseas Healthcare Team at NHS Business Services Authority
- The S1 covers you and may also cover your dependants
If retiring outside the EEA, you will generally need private health insurance. Premiums increase with age, and pre-existing conditions may be excluded or attract higher premiums. Budget for healthcare costs carefully — this is one of the most significant expenses in overseas retirement.
Step 5: Managing Currency Risk
If your pension is paid in pounds but your living costs are in another currency, exchange rate movements can significantly affect your standard of living. When the pound is strong, your pension buys more locally; when it weakens, your income falls in real terms.
Practical strategies to manage currency risk include:
- Use a specialist transfer service — companies like Wise, OFX, or Currencies Direct offer significantly better exchange rates than banks, saving you 1–3% on each transfer
- Set up regular transfers — automatic monthly transfers smooth out exchange rate fluctuations over time (pound-cost averaging)
- Hold a buffer in local currency — keep 3–6 months of expenses in your local currency account so you do not have to convert when rates are unfavourable
- Consider forward contracts — lock in today’s exchange rate for future transfers if you believe rates may move against you
- Keep some income sources in local currency — if possible, maintain investments or income streams denominated in your local currency
Step 6: Pension Withdrawal Strategy
How you draw your pension abroad matters. Consider these points:
- Take your 25% tax-free lump sum before you move — the pension commencement lump sum (PCLS) is tax-free in the UK, but some countries may tax it if you take it after becoming resident there
- Plan withdrawals around tax thresholds — understand the income tax bands in your new country and plan pension withdrawals to stay within lower tax bands where possible
- Consider phased drawdown — rather than taking large lump sums, regular smaller withdrawals may be more tax-efficient and reduce currency risk
- Review the sustainable withdrawal rate — the widely-cited 4% rule may need adjusting for currency risk, different inflation rates, or the cost of living in your destination
Step 7: Estate Planning Across Borders
Living abroad adds complexity to inheritance planning. Your UK pension benefits may be subject to different rules depending on where you are resident when you die. Key considerations:
- UK pensions remain outside your estate for inheritance tax purposes regardless of where you live (provided they are in a registered pension scheme)
- Your country of residence may have its own succession and inheritance tax rules that could affect how pension death benefits are treated
- Keep your expression of wishes (pension nomination form) up to date with your UK pension provider
- Ensure your will covers assets in both countries — you may need separate wills for UK and overseas assets
The Complete Checklist Summary
| Task | When | Status |
|---|---|---|
| Check State Pension forecast and NI record | 12 months before | □ |
| Contact all pension providers about overseas arrangements | 12 months before | □ |
| Research destination country tax rules and DTAs | 12 months before | □ |
| Decide on QROPS transfer vs keeping pensions in UK | 6 months before | □ |
| Apply for S1 healthcare form (EEA) or arrange health insurance | 6 months before | □ |
| Open overseas bank account | 6 months before | □ |
| Set up currency transfer service | 6 months before | □ |
| Consider taking 25% tax-free lump sum before moving | 3–6 months before | □ |
| Complete HMRC form P85 | 3 months before | □ |
| Apply for NT tax code (form DT-Individual) | 3 months before | □ |
| Fill any remaining NI gaps | Before departure | □ |
| Update pension providers with new overseas address | On moving | □ |
| Register with local tax authority | On arrival | □ |
| Update wills and pension nomination forms | Within 3 months of moving | □ |
For country-specific guidance, see our guides on retiring to Spain, France, Portugal, and Australia.